AIS Health: New Medicaid Managed Care Rule Aims to Lift States’ Burden

New Medicaid Managed Care Rule Aims to Lift States’ Burden

Reprinted with AIS Health’s permission from the November 15, 2018, issue of Radar on Medicare Advantage

Two days after the GOP lost control of the House, the Trump administration released its long-awaited “rewrite” of an Obama-era Medicaid rule that was intended to reflect rising managed care penetration. But at a mere 131 pages, the new proposed rule (83 Fed. Reg. 57264, Nov. 14, 2018) contained more technical revisions than significant changes like those that comprised the 600-plus page managed care rule from 2016.

“It appears to be more limited in scope and really tailored to what was in the preamble of the rule, which is that it’s meant to reduce the administrative and cost burden on states — and obviously their plan partners, but mostly the states — in areas where these rules that were in place didn’t necessarily translate to better patient outcomes [and] were just burdensome,” observes Alex Shekhdar, vice president of federal and state policy with Medicaid Health Plans of America (MHPA).

CMS in a Nov. 8 press release accompanying the proposed rule explained that the new rule aims to reduce administrative burden, streamline the 2016 managed care regulatory framework and “promote transparency, flexibility, and innovation in care delivery.” The agency sought feedback from states through a work group it formed with the National Association of Medicaid Directors and state Medicaid directors.

While MHPA viewed it as “an overall move in the positive direction,” Shekhdar notes that the use of a minimum 85% medical loss ratio (MLR) in rate setting that was included in the 2016 rule was not addressed in the recent update. And MHPA has long held that a federalized MLR is unnecessary, both because the MLR is already built into health plans’ contracts and because it could have an impact on states’ efforts to innovate care management.

“We still continue to advocate the proposition that while [the MLR is] informed by other programs [e.g., Medicare Advantage], as the Medicaid program evolves and takes on different populations and becomes broader, it is prudent to revisit the 85% MLR threshold,” Shekhdar tells AIS Health.

Meanwhile, CMS proposed new flexibility for setting actuarially sound capitation rates in terms of rate ranges rather than on rate cells that were required in the 2016 rule. States would have the option to develop and certify a rate range per rate cell within certain parameters; upper and lower bounds of the range would be certified as actuarially sound.

While MHPA is still reviewing the proposed rule, Shekhdar says the trade group’s initial read on the rate range option is that it will provide “much more latitude to reflect the realities of what plans are actually doing” since the limits will be based on the services that are inside the state plan amendments submitted by states to operate their managed Medicaid programs.

Additionally, CMS proposed to infuse some flexibility into several other areas impacting plans, including:

Network adequacy. Instead of holding states to time and distance requirements, CMS proposed establishing “quantitative” standards that would allow states to use alternative metrics such as a “provider to enrollee ratio.” The proposed alternative would account for the realities of a state’s existing medical infrastructure and open the door for more telemedicine, suggests Shekhdar. At the same time, the rule clarified that states have the authority to define “specialists” in the most appropriate way for their programs.

Pass-through payments. The rule proposed allowing states that are transitioning Medicaid populations or services from fee for service to managed care a three-year transition period to come into compliance with requirements related to pass-through payments.

Quality rating system (QRS). While more detail will follow in a separate proposal, CMS said it intends to give states more flexibility to tailor an alternative QRS to their unique program. CMS will develop a minimum set of mandatory performance measures that will apply equally to the federal QRS and alternative QRS.

Beneficiary communications. Among other things, CMS said it would allow paper provider directories to be updated quarterly rather than monthly if the managed care plan offers a mobile-enabled provider directory.

Meanwhile, CMS in the proposed rule maintained a provision that limits capitation payments for enrollee stays in an institution for mental disease (IMD) to 15 days. Although states had expressed concerns that the provision creates administrative challenges, CMS said it is seeking “comment from states for data that could support revisions to this policy.”

CMS will accept comments on the proposed rule through Jan. 14, 2019.

Visit Contact Shekhdar via Joe Reblando at

by Lauren Flynn Kelly

Article from AIS Health